Why Uber and Airbnb Needed a Different Kind of CEO

Since their founding less than a decade ago, Uber and Airbnb have wrangled with regulators, challenged the taxi and hotel industries, earned extraordinary valuations from venture capital investors — and fundamentally transformed the way people think about urban transportation and travel. In his new book, The Upstarts: How Uber, Airbnb, and the Killer Companies of the New Silicon Valley Are Changing the World, veteran Bloomberg technology writer Brad Stone unravels the facts from the mythology surrounding the companies’ rise. He talked with HBR about what makes these generation of tech startups different from the ones that came before. Our conversation has been edited for length and clarity:

HBR: At both companies, you uncovered new details on how the startups originated. Why is this important?

Stone: Every company simplifies their founding tale. It’s especially prevalent in Silicon Valley. Founding stories are messy. There are often multiple people, some of whom don’t hang around, so these stories evolve over time. At Uber, the idea for the business has been portrayed as this stroke of ingenuity, but I learned it was actually inspired by a product placement in the 2006 James Bond film Casino Royale. There’s a scene in which Daniel Craig uses his Sony Ericsson phone to track the route of a car using GPS, and that gave Garrett Camp, one of Uber’s founders, the idea for using phones to let users see the locations of a car service. Airbnb’s origin story revolves around two design school students who decided to welcome guests into their apartment and let them sleep on air mattresses. That is true, but these were very ambitious entrepreneurs who had been desperately searching for a winning startup idea for quite a while.

How are the CEOs of Airbnb and Uber, Brian Chesky and Travis Kalanick, different from the founders of earlier tech companies?

It took a while for me to realize that this was a main theme of the book. I’ve covered tech for 20 years, so I’d interviewed people like Mark Zuckerberg and the Google founders early in their careers. They were terrible communicators, not charismatic, and very wary of the press. They didn’t have to be good storytellers because their businesses spread virally and their products stood for themselves. Uber and Airbnb are different. The first thing that happened to these companies was that they became involved in regulatory battles with cities. Uber received its first cease-and-desist order when it had just half a dozen employees. Because of these challenges, these companies required a different kind of CEO — extroverted, a good storyteller, a politician, someone who could charismatically rally customers to their cause.

So much of the risks and challenges facing these companies involved whether their business models were legal. How could venture capitalists assess that risk to decide whether to invest?

The irony is many VCs just passed on them. It’s striking how many of the wisest minds in Silicon Valley didn’t see these companies succeeding. Even VCs that did invest, like Andreessen Horowitz, passed on earlier rounds. The VCs who passed did so because these businesses looked like they were illegal, because there was going to be a fight in every city, and because these founders didn’t look like Mark Zuckerberg, which is the type of founder the VCs had grown accustomed to backing.

How important were lobbyists to helping these firms scale?

Lobbyists were early hires at both companies. That’s true for a lot of these “sharing economy” companies, which are pushing regulatory boundaries. We’ve seen a big flood of these professional lobbyists, many of them former Obama administration operatives, into the tech companies because they see an opportunity to help bring these businesses into the world (and earn potentially lucrative startup stock).

Much of Uber and Airbnb’s success in dealing with regulators has come from its support among consumers. How have the companies marshalled its users as a political force?

In both cases, these companies were facing incumbent industries that were adept at exerting their influence. Uber was up against taxi companies, which are skilled at lobbying local governments. The same is true for the hotel owners who oppose Airbnb. These companies had to do something. Kalanick had the idea of emailing all of Uber’s customers in Washington, DC, and he organized a huge email, phone, and Twitter campaign in which customers lobbied the city council. It worked because people loved Uber, so they came to its defense. This was true for both companies: If they didn’t have a deep connection with consumers, they wouldn’t have been able to organize them into such a potent lobbying force.

Is it a coincidence that two startups relying on business models that clashed so directly with regulators emerged at the same time?

It had everything to do with the emergence of the iPhone, Android, the App Store, and the ubiquity of GPS. Easier forms of digital payment, and the use of Facebook to establish people’s real identities in online transactions, were also important. All these things helped make it easier to create a connection between strangers, which accelerated these businesses and created clashes with existing regulations.

Both of these startups have been criticized over a range of safety incidents — traffic accidents, sexual assaults, unsafe accommodations, etc. How well have they handled these issues?

Early on, neither company was prepared, and that’s unfortunate. It didn’t take much to extrapolate that asking nonprofessional drivers to become taxi drivers who are looking at smartphones while driving could lead to tragic accidents, or that when normal people turn their apartments into hotel rooms, they may not have safety measures like carbon monoxide detectors in place. Both companies had to react to tragedies. Airbnb distributed carbon monoxide detectors to its hosts. Uber has beefed up safety and background checks. A certain number of these problems are unavoidable for companies operating these massive global networks, and the companies have gotten better at managing and communicating about them.

Your last book was a biography of Amazon founder Jeff Bezos. By comparison, Chesky and Kalanick feel smaller, and their ambitions seem less world-changing.

That’s true right now. But remember, these companies are less than half the age of Amazon. At the same point in its life, Amazon looked pretty one-dimensional too; it hadn’t done the Kindle, Prime, or Amazon Web Services. I see this book as sort of a sequel to The Everything Store. Both Chesky and Kalanick are disciples of Bezos, who personally invested in both Uber and Airbnb. They’ve learned a lot from Jeff, and they’ve modeled their companies after Amazon. Both companies are getting into new businesses: Uber is working with driverless cars and food delivery, and Airbnb has launched Experiences and Trips to become a broader travel company. Right now neither company seems like it can change our lives the way Amazon has, but you have to give them time.